Income and Poverty

Modern Poverty: What’s changed in 20 years and why work is no longer the route out of poverty in the UK

  • Published 31st Aug 2021
  • Authors: Peter Kenway, , Josh Holden,
  • Category: Income and Poverty

After six disastrous years, the number of children in poverty in the UK when the Covid-19 pandemic struck in early 2020 had returned to where it was in 1999, when the government announced its goal of abolishing child poverty within a generation. But child poverty back at 20th-century levels does not mean that everything else to do with poverty is back there too. This report shows how the conditions associated with poverty now – ‘modern poverty’ – are different from what they were then. While policies to solve poverty must change, they cannot do so until the ‘story’ that is told about what poverty looks like and why it exists changes too.

Although this report starts with child poverty, its focus is on in-work poverty, that is, when households with a working adult have a low-enough income to leave them in poverty.  The argument made in this report rests on four sets of facts that describe the conditions of poverty in the UK today and how they differ from poverty 20 years ago:

Nearly 1 in 5 children in households where all adults are working, and approaching 1 in 2 where some are working, are now in poverty. Rising intermittently since 2005 and steadily since 2010, these in-work ‘poverty rates’ are at record highs. Three quarters of children in poverty are in working households.

More than 4 in 10 of all working adults in poverty have a family member who is either disabled or suffering from an illness which limits their day-to-day activities. Two thirds of working-age adults in poverty have either a dependent child in their family or someone who is disabled or ill.

Almost 3 in 10 of all those in poverty have a household income less than half what they would need even to be at the poverty line, up over the last 20 years from just under 2 in 10.

Housing costs for lower-income households have risen over 20 years compared with costs for those on middle incomes. The poorest fifth face the highest average costs, while the second-poorest fifth now face the second highest. These high average costs reflect the large number of lower-income households living in the private- or social-rented sectors.

Taken together, these facts paint a picture of modern poverty as a condition likely to be experienced by working households, with family responsibilities that limit paid work, high housing costs and an income that may be far below the poverty line.

The report concludes that the story that is told about why poverty exists and who is likely to experience it needs to reflect this reality. It can only do this if the old story, which saw work as the route out of poverty, is rejected because its premise – that poverty is due to worklessness – is no longer true.

About this report
This report was funded by the New Policy Institute and written by Peter Kenway and Josh Holden. The facts presented and views expressed in this report are those of the authors alone.